African Mining January 2023 | Page 21

MINING INDABA •

“ The mining industry , though , is fairly well placed to weather these conditions – as most companies are in a reasonably good cash position with sound balance sheets ,” he said . “ Moreover , the projects they are involved in or considering are generally well funded , and there is more investment or debt funding available in the market .”

The likely outlook is that the anticipated slowdown in economies will be short-term ; the mining industry may see a period of lower earnings , but reasonable cash flow should resume .

Look-out signs “ There is no indication yet that a recession will be deep enough to put a halt to the projects that are already underway ,” he argued . “ Obviously , everyone has been on the look-out for signs that a recession might be serious enough to cause projects to be paused or shelved . Developments in the Russia-Ukraine conflict and energy availability and cost during the upcoming Northern Hemisphere winter will be a key determinant of whether the broader economy can be stabilised and return to growth and other strategic priorities or whether energy prices will lead to major destabilisation and a shift to survival .”

Focusing on Africa , he expected a continuation of a general trend towards improved conditions for mining and other economic activity – despite irregular progress in particular countries from time to time . He noted the point in EY ’ s report that capital allocated to global exploration has doubled over the past five years , with most directed to gold and copper exploration .

“ This bodes well for areas like Africa ’ s copper belt – as well as for the continent ’ s gold mining industry , which has been successful over a range of jurisdictions ,” he said . “ SRK has certainly seen more investment in exploration across various locations and commodities ; this trend has also followed price improvements in many minerals .”

Enhancing impact Future-facing commodities such as copper , nickel , lithium and cobalt are increasingly in the spotlight , as they will underpin the energy transition . Van Zyl pointed to a number of opportunities for Africa on this score .

“ Lithium prospects in countries like Zimbabwe , Namibia and Ghana reflect the kind of progress being made and we ’ re likely to see more of these as exploration continues ,” he said .

Alongside these developments , mines face the ongoing risks related to environmental , social and governance ( ESG ) challenges ; it is no surprise that ESG heads up EY ’ s ranking of risk for the coming year . It is , of course , also an opportunity for the sector to build its foundation for enhancing future positive impact , argued Van Zyl .

“ There is a continuous drive to improve our ESG knowledge and capability in the sector , where we continue to get better in vital fields like stakeholder engagement and managing impacts ,” he said . “ Similarly , there is momentum behind efforts to enhance positive local impact through strategies that foster local employment , manufacturing and supply .”

Responsible sourcing This relates strongly to broader initiatives such as the European Union ’ s RE-SOURCING platform , in which SRK Consulting is engaged as an active partner . This work aims to advance the responsible sourcing of raw material across global mineral value chains – especially in anticipation of Europe ’ s growing procurement of battery minerals and other commodities that will feed the energy transition . Mining is also likely to be impacted by the move to increase the resilience of various regional economies with the risks of being overly reliant on single countries to supply key commodities being highlighted by current conflicts and lockdowns . This will shift mining to new regions and also impact how projects are selected and financed .

“ This is a good example of how the mining industry evolves , and this initiative begins with finding a common understanding of responsible sourcing ,” he said . “ These are important steps in locating the mining sector in global efforts toward sustainability and forging a circular economy .”

One of the many concerns here will be mining ’ s contribution to climate action , by working towards decarbonising mining operations . Mining in Africa , like mining everywhere , will need to gradually improve its ability to measure and reduce its carbon emissions , he said .

“ Notwithstanding the range of challenges , mining is a resilient industry that responds well to opportunities while navigating often difficult terrain ,” said Van Zyl . “ It heads into the new year with considerable momentum and remains on an ongoing learning curve to pave its future .”•

Logistics costs are up and delays for raw materials are long , increasing the cost and complexity of operating a mining company .

Andrew van Zyl will assume the role of managing director at SRK Consulting Africa in January 2023 ; he has worked at SRK for almost 12 years . He has spent several years as technical advisor to government committees , overseeing the negotiation of mining conventions and rail and mineral terminal concessions . His experience includes valuing metals and minerals assets , including iron ore , manganese , chrome , copper , coal , gold and platinum group metals .

Andrew van Zyl , director and principal consultant at SRK Consulting .

Van Zyl is on the council of the Southern African Institute of Mining and Metallurgy ( SAIMM ), where he serves on its Environmental , Social , Governance and Sustainability ( ESG-S ) committee . He is the past chair of the South African Mineral Valuation ( SAMVAL ) committee . His qualifications include a B Eng ( Chemical ) from Stellenbosch University and M Com ( Financial Economics ) from the University of Johannesburg .

SRK Consulting